What Happens If A Buyer Cannot Close On Their Preconstruction Condo?

The spring and summer of 2017 are going to be an interesting time for Miami in a real estate sense. We are going to see a flurry of new condo developments opening, bringing thousands of new closings (and probably hundreds of new resale and rental listings).

Brickell Heights 01 and Brickell Heights 02 are set to open within the next month, 1010 Brickell will follow shortly thereafter (or maybe they will open before… the two projects are neck and neck). Up in Edgewater, Biscayne Beach is slated to open its doors any day now, followed by the first tower of the Paraiso District, Paraiso Bay. The four projects together total over 1,800 new condos that are set for completion this summer. The fall and winter will bring another flurry, but for now let’s concentrate on the openings that are closer. These projects are all effectively sold-out. They are a wild success for the developers! But, what happens if one of the buyers is unable to come up with the remaining funds to close?

During the sales cycle of these four towers, the developers were requiring staggered deposit schedules that totaled a 50% down payment prior to closing and the remaining 50% due at closing. Remember that the majority of these condo sold in 2014-2015. A lot of things can happen in 3 years that can change the financial situation of the buyers. There could be an argument between partners in a condo, divorce, death, health issues. There could be political problems, currency exchange rate troubles, economic hardship. A dictator could be elected. We all know that these things are going on around the globe and they are all very sad. But what happens if one of these factors affects a buyer’s ability to close? It isn’t as dire as some may fear. The buyers do have choices.

They can walk from their deposit

Everyone knows this one. If you put a deposit down on a contract and don’t complete the contract, you will lose your deposit. It is very straightforward, and it stings. These condos sold around $500-$600/square foot. If you figure Related Group’s signature 2 bedroom layout that is almost always 1,200 square feet, give or take, the sale amount would be around $700,000. That’s a $350,000 loss, and that is not ideal for anyone… but it’s an option.

They can close with a mortgage

Although condo financing isn’t easy in brand-new developments, there are banks that will finance preconstruction purchases at the time of closing. The challenge is that many of the buyers in these developments are foreign nationals, and those mortgages are more difficult. Some banks refuse to lend to buyers from countries that have political turmoil (looking at you, Venezuela). It’s not a racist thing, the banks are worried about the political climate and their ability to recoup the mortgage. If you have questions about which banks can finance buyers from different countries, let us know. We have a resource that can help.

They can close with a private mortgage

If traditional financing just isn’t a possibility, buyers could visit a private lender. These mortgages typically require very little documentation and are able to close very quickly because the lender is familiar with the local market, the project, and bases the approval on that. The downside of these mortgages is that they are extremely expensive. Expect to pay 3-4 points to the lender at closing as a fee plus astronomical interest rates. I’ve seen interest rates as high as 13-14%. If a buyer was attempting to close the signature 2 bedroom unit that we discussed previously, that would amount to $10,500 – $14,000 just as a closing fee. Then you could expect around $4,000 per month to go just toward interest. Again, not ideal but also better than losing $350,000 right out of the gate.

They could find someone to step in and close on their behalf

This is probably the most ideal situation for someone in a preconstruction condo bind. Developers typically frown upon contract flipping and there’s no guarantee they would approve it, but developers in today’s market are also not eager to hold inventory on a previously sold-out project. They want to take their money and go do something else until another build cycle opportunity presents itself.

We have already had several investors request opportunities to buy in the event that a preconstruction buyer cannot or will not close. If anyone is in a preconstruction condo bind, please contact us and hopefully we can work it out in a mutually beneficial way.

Where Do Tennis Stars Live In Miami?

Here we are at the Finals Weekend of the 2017 Miami Open! This week we have highlighted the new developments and existing buildings that offer amenities for tennis fans, but where do the tennis pros themselves choose to live? You would be surprised to know how many tennis stars have condos in Miami!

We have covered Andy Murray‘s attempts to sell his 45th floor apartment at Jade Residences at Brickell Bay. To be honest, I’m not sure what’s going on with this apartment. The price volleys up and down on a monthly basis, but nobody buys. It all started in November of 2015 when he listed the property for sale at just under $3 million. Someone placed a contract on the property, but it fell apart and the property went back to market for $2.7 million in October of 2016. That’s when the seesaw started. In November of 2016, the price went down to $2.59 million, then back to $2.69 million a few days later. In January of 2017, there was another reduction to $2.64 million, then down to $2.5 million in February. Two weeks later, the price was raised to $2.65 million and is still at that point. It is an interesting marketing strategy to say the least. I feel like that if they would stop the pricing games and have the property re-photographed, it would sell. We have apartment 4107 on the market in the same building and have experienced a lot of traffic. We hope to sell it very soon, but I digress. 

Probably the largest concentration of tennis stars will be in Edgewater at The Paraiso District. The project is top of the line when it comes to tennis with five hard-courts, the same as those at the Miami Open Masters, Gram Slam, US Open and Australian Open. Hard-courts are preferred by avid players looking to practice their fast game. Spanish former No. 1 professional tennis player Arantxa Sanchez Vicario and No. 6 French player Gael Monfils have already purchased their homes at the project and it has also been a favorite of Venus Williams, who made a surprise appearance at the opening of the sales gallery back in 2014. 

Andre Agassi and Caroline Wozniacki have also chosen to live on Fisher Island for its club’s expansive and globally ranked tennis facilities including a pro-shop and eighteen courts from grass to hard-courts to clay courts. Residents at Palazzo Del Sol, the latest luxury residential addition to the island, will have full access to the same club.

Paraiso Construction & Sales Update

The folks over at Plaza Construction have been hard at work over the last few months, making big progress on the Paraiso Complex in Edgewater that is made up of Paraiso Bay, GranParaiso, One Paraiso, Paraiso Bayviews, Paraiso Bayhomes and the Paraiso Beach Club. That’s a lot of Paraisos! Here is how they are coming along, followed by construction photos:

• Paraiso Bay is currently sold out. It has topped off and is now being finished out. They are scheduled to start closings in the early Summer 2017.
• One Paraiso has reached the 37th floor of the 53 story tower. There are a handful of penthouses remaining, priced between $2 million – $3.5 million.
• Paraiso Bayviews has reached the 33rd floor with 10 to go until topoff at 43 stories. This is the least expensive of the towers and Related Group is currently near close-out on the inventory. The last remaining opportunities range from $600k for a 1,460 square foot 2 bedroom/2 bath up to $1.6 million for a 2,522 square foot upper penthouse with 4 bedrooms and 4.5 baths.
• GranParaiso is the last of the 4 large towers to be completed. It has reached the 22nd floor and will top off at 53 stories. The last opportunities in this tower range from an $800k 1 bedroom, 2 bath with 1,000 square feet up to $3.2 million for a 3,200 square foot upper penthouse with 4 bedrooms and 4.5 baths.
• The Paraiso Bayhomes are a small enclave of townhome-style units along the base of the project. These are 4 stories tall and feel more like a single-family home than a condo. There are only 2 remaining of the 8 that are under construction. They are available at $2 million apiece. One has 3 bedrooms and the other has 4 bedrooms. They have topped out already and are receiving their glass panels.
• The Paraiso Beach Club is a shared amenity for the four towers and Bayhomes. It is set to open alongside Paraiso Bay this summer and will feature a restaurant by Michael Schwartz as well as boat slips for the residents to enjoy. Update: The restaurant is called Amara at Paraiso.
  Have a look at the photos here:
  

  Paraiso Sales Gallery

  

  Paraiso Beach Club – Paraiso Bay

  

  Paraiso Beach Club

  

  Paraiso Bayviews West Facade

  

  Paraiso Bayviews West

  

  Paraiso Bayviews & Paraiso Bay

  

  Paraiso Bayviews Lower Levels

  

  Paraiso Bayviews Construction Progress

  

  Paraiso Bayviews and OneParaiso

  

  Paraiso Bayviews

  

  Paraiso Bayhomes Construction Progress

  

  Paraiso Bayhomes and Gran Paraiso

  

  Paraiso Bayhomes

  

  Paraiso Bay Condos

  

  Paraiso Bay and Gran Paraiso

  

  Paraiso Bay

  

  One Paraiso Facade

  

  One Paraiso Facade

  

  One Paraiso

  

  One Paraiso

  

  Gran Paraiso

  

  Gran Paraiso

   

Paraiso Bay Tops Off In Patriotic Fashion

Just ahead of the big election, Paraiso Bay tops off dressed with an enormous American flag on the top. This is the first tower in the “Paraiso District” to top off, and was also the first to sell out. Construction began in the summer of 2014 and is expected to finish in 2017.

As Paraiso Bay is already sold out, opportunities are still available in the other towers that are also under construction. GranParaiso still has 11 apartments remaining between $770k for a 1 bedroom with a den up to $1.95M for a 4 bedroom condo with a den. They also have 4 penthouse units remaining between $2M-$3.4M. Paraiso Bayviews, the more economical of the buildings has opportunities between $615k to $630k for 2 bedroom apartments and penthouses between $641k-$1.55M. Along the bay there are also a row of “Bay Homes”. These are townhouse-style condos that feel more like a home. They are all 3-4 bedrooms and range between $1.9M-$2.25M.

The Related Group is also planning a “Paraiso Beach Club” with a restaurant by Michael Schwartz as well as a park for the residents.

Checking in on Construction at Paraiso, Related’s Colossal Condo ‘Paradise’

Paraiso Bay

Since the last time we got a good look at the Related Group’s quartet of ‘Paraiso’ condo towers in Edgewater a month ago, construction has continued full steam ahead, with all four towers and that massive bay-facing amenity deck taking shape around the ever present prefab sales center on the bay. Christian Tupper, Related sales manager, shared another round of construction shots showing the progress made. Check out the photos, after the jump.

Paraiso Construction is Going Absolutely Full Throttle

Looking at ONEParaiso. Photos by Christian Tupper, Related Group Sales Manager.

Now that they moved that sales center out of the way and the Paraiso Beach Club is underway, construction at the Related Group’s Paraiso community in Edgewater is going like gangbusters, with work ongoing at every element of the project except for  the public park. That’s were the sales center is located. Christian Tupper, a sales manager for Related, updated us on the construction progress of each element of Paraiso as well as the remaining availability.

PARAISO BAY (sold out): construction currently on the 53rd floor.

ONE PARAISO (2 Penthouse units available): construction currently on the 10th floor.

Paraiso BAYVIEWS (2 Bedrooms from $580K and Penthouses avaialable): construction currently on the 10th floor.

BAY HOMES (Liner units below the Paraiso Bay and Gran Paraiso amenity deck. 5 units available): construction currently on the 4th floor.

GRAN PARAISO (1,2,3,4 Bedroom & Penthouses Available): construction currently on the 4th floor.